 From New York, it's theCUBE, covering Blockchain Week. Now, here's John Furrier. Hello everyone, welcome back. I'm John Furrier, the host of theCUBE. We're here in New York City for on the ground coverage. We're here three days wall to wall for Blockchain Week, New York's part of Consensus 2018. Sold out show, we're in the middle, we're out in the open. Open, open up all the content. Our next guest is Alex Mishinsky, founder and CEO of Celsius, seasoned entrepreneur, great debater on stage and a great brawl recently at the Milken Institute. We'll talk about that, but more importantly, he's got a great project called Celsius. Welcome to theCUBE, thanks. Thanks for having us, John. So a lot of people just chatting before camera, camera turned on about some of the things you've done. You got to know a little bit of a great heated panel discussion about with someone who actually doesn't even hold cryptocurrency, but he was saying it's all bullshit. Yes. Right, so tell about the story. It was written up by Bloomberg. What was this famous brawl in the Milken Institute? Yes, look, the Milken Institute, they've been having conferences for the last 25 years and they're trying to combine the making money with doing good in the world, right? So it's doing well and doing good at the same time. And that's what crypto is all about, right? And then, so they had a panel about crypto with me and Nouriel Rubini who's like Dr. Doom who predicted the last 15 recessions. There were only two, but they were predicted 15, all 15 of them. So I was telling him, you know, even a broken clock is right twice a day, you know? He was going at me, he was going at the community, he was calling it a scam. And when you don't own any coin and you have not come to an event like this and seen 8,000 people celebrate this innovation powered to the people, then what are you talking about? So, you know, I was there to really defend the community, it wasn't about me or him. Yeah, you did a good job. Well, thank you for doing that. It's also, you're on a great project. I've been talking about a lot of other things I want to get to in the industry that you have a view and opinion on, I would like to get. But your project Celsius, take a minute to explain that because I think this highlights really what's going on. I chatted earlier today about token economics. This is a new way, a new infrastructure, a new capability, a new mechanism that's really becoming powerful of a network effect. So the old world was DNS, 30 years old stack of an e-commerce, search engines, they're not accurate for network effects, a new dynamic, a new data source is happening and it's creating new value, new data. Talk about Celsius, the project and your value proposition. Right, so Celsius network is basically trying to create an algorithmic cloud-based solution that does everything in your best interest. So you have to think of it as a basket of financial services that do simple things like give you a loan or allow you to earn interest, give you access to a lot of great financial products, insurance and other things that altogether do everything in your best interest. And what we're doing is we're enabling 100 million people, new people to come into the crypto community and enabling them to benefit from all these things, both from the increase in the value of the coins but also allowing them to their money to earn money for them. And today, if you think about banks, they take your money, make a deposit, they take your money, they lend it to me on my credit card, they charge me 25%, they give you 1%. So they take all that margin that you talked about, they squeeze all of that and keep it to themselves. And they're representing two people. It's like a realtor, who do you represent? The buyer or seller? They're a total collector in the middle, exactly. They're not adding any value. So the new shift is on user value and you see real-world examples of this, the whole Facebook debacle, who owns your data and Mark Zuckerberg was up in front of, testing in front of the Senate and Congress saying, no, we don't sell your data. No, but they license the data and they use it. They extract all the value from it. They don't actually sell the data, true. But they license the shit out of it, the target is. They squeeze every last penny out of it, you know? This is now obvious to people. Yes. That problem. Yes. Talk about the crypto benefits. Where is this shift happening? Users, the power to the people, I get the phrase, but where's it happening? The token level? Yeah, let's take an example. So most of the people here on this floor, they take their coins, they put it on exchanges and they celebrate the fact that the coin went up 50%, 100% or whatever, but they don't realize that they're leaving a lot of money on the table because these exchanges do shorting, front running, all kind of other stuff that should be illegal, but they do it, right? So they announce these amazing earnings, right? Binance announced amazing earnings and a lot of that earnings comes from the money that should be given back to you and me. So if you think about the credit card company giving you 2% back, this is kind of the same thing. We are basically taking all of that earnings and giving it back to the coin holders, right? And we're saying, don't keep your money on exchanges, keep your money in the wallet that represents your best interest. It extracts all that value and gives it back to you. And so what's your value proposition? You're going to use and say, use our wallet, use our system. Right. And then you represent their currency. So we huddled together. We create a giant pool of BTC, a giant pool of ETH, right? Or other coins. And we land against that. So we can do loans to the community. We charge 9% for asset-backed loans basically. So you need a loan against your crypto. This way you don't have to pay taxes. You can defer your tax. You can get liquidity without triggering all the tax that today you have to, or you can just earn the interest. So without selling the coins, you can basically generate 5% to 9% income that's continuous on top of the appreciation. You still get all the appreciation in the coin, but you're also generating income. So you can bring contextual services around the crypto holder's interests. Yeah, so we find people who are willing to pay that. For example, other crypto holders who want the loan and they pass 9%, we give 5% to the community. Hedge funds who short BTC or ETH, they pass 10% or 15%, we give most of that back to the community. The beauty is that the coin holder doesn't have to do anything. They don't have to move from this account to that account. They don't have to do transactions. All they have to do is decide if Celsius Network is doing everything in their best interest or not. And the point is that the next 100 million people that are going to join crypto, they're not speculators or anarchists or libertarians like most of the people here on the floor. They're people who kind of look at all this saying it's too complicated, I don't know what to do, I'm not going to get in at the right time, I'm not going to get out at the right time. They don't have anyone they can trust. So I'm going to be, I'm going to ask the average Joe six pack question, hey, that's all fine now, I love what you're doing, come on, sign me up. But wait a minute, if you put all this crypto in one spot, the fricking hackers are going to get it. Right. Because how do you protect me against, I heard, see Mt. Gox and all this stuff's going on, I'm worried that it's going to get hacked, even more where I put it. And then Nouriel basically asked me the same question. So in 10 years since Bitcoin was created, there hasn't been a single instance of anyone cracking the blockchain itself. All the theft, everything that happened was because we gave somebody our private key and we entrusted them with it and they screwed up. Mt. Gox they basically broke into the exchange and so on. So we keep everything in cold storage, right? So it's not ours, we have a custodian that is a giant company that is willing to accept all that, keep it in cold storage, right? And we land against it, we land against the pool. So the private key's going in cold storage? Everything is staying in cold storage, which is the safest way to keep your crypto. It's much safer than keeping it on an exchange or keeping it in a different place. It's ultimately net encryption, it's never safe to, private key's private key, right? I mean, we've seen this before. Exactly. It's not rocket science. But even if you keep it in your home and you're safe, that's not as safe as putting it in a facility that is resistant to nuclear attack and has four layers of security and no human can get into the last room. It's a physical connection. You've heard this problem just estate planning. Someone dies, where's this crypto key? Exactly. Unlocking, say, $30 to $100 million worth of crypto. Exactly. It's not obvious. Well, the guy was smart. He put him in lock boxes all around the country. Wait a minute, no one knows where they are. But as a custodian, if you show us that you are the ultimate heir and you have the legal representation, then we can handle it, right? We can transfer that, but really, you're protecting it against a hacker coming in and stealing it from you. All the legal ramifications still apply. So let's talk about the industry. What do you like about the industry right now and what do you think that needs to do more work on faster or behavior-wise? What's your general temperature taking of the current community? A lot of back-end work being done. I mean, some complaints I heard about the demos were some possibility that front-end was pretty sucky, but I think that's because a lot of back-end work's being done. Well, this reminds me of 95 to 2000. I wrote some of the original VoIP protocols and everybody told me it's not going to work. The internet is too slow. You can't scale. It's not safe. I hear the same arguments again and again. Exactly. Today a billion people use VoIP every day and they don't even know who created it or how it works. You know, I go in a room, I do speeches, right? And I ask, who here knows how VoIP works? Not a single hand goes out. So we need to get to the point where blockchain and crypto works the same way where now no one needs to understand how it works. They just need to use it and trust it. So the biggest thing I think holding us up right now is actually not technical because there's over 130 different blockchains. And some of them solves the scalability issue and security issues. The problem is that we kind of have the early adopter phase but we cannot leapfrog into the mass adoption phase because we're still at the early phase of application. Is that just evolution or is it something specific? Well, the application that we have today are not things that most of the people on the planet can use. That's what I'm saying. For example, lending and borrowing is much more attractive than trading coins with each other. Yeah, it's like the web and web 1.0. I mean, search was the first application and everyone went through there, checked their stock books. Booking your travel. Travel, buying a car. Exactly. Basic, you know, Maslow's hierarchy of needs kind of things. Yes. But that was interesting because it was a whole new way and by the way, same arguments I heard in the web. It's so slow. A mini computer is so much faster than this AOL thing at 9,600 bod modem. But it wasn't displacing. The apples weren't being compared to other apples. It was replacing direct mail where I used to put stamps on envelopes and mail. That's right. Look, the bank gives you 1%. We pay 5%. So that is a very attractive reason to switch from the bank to Celsius. Also, most people don't realize that the power the bank has is because we make all the deposits there. We stop depositing money there. They will have to pay us 5% because as the money leaves them, they will have to raise the rates. They're going to have to attract you with more interest. So it's a win-win. We're all, the community wins on the crypto side and we're forcing the banks to do the right thing. All right, I want to get your opinion, Alice, on ICOs. Did you guys do an ICO? How much did you raise? And what's your general take of the ICO market? I mean, certainly, Blockchain, I've said this before, takes inefficiencies and makes them highly efficient and we know the capital markets are very inefficient, so it's a bubble. Okay, because I have a choice. Tokens or VC? Exactly. It's no brainer, go tokens. So look, I've had coins since 2013. I've invested in over 30 ICOs myself and then when I couldn't find what Celsius does, I decided to start a new company. This is my eighth company as a founder, right? So I raised a billion dollars on the VC side. I know how that world works, had plenty of exits. And here, we went to the community. We excluded all the VC's. We did not take money from a single venture guy because this is all about building the community. So we just closed our race about a month ago. We raised $50 million. We had 15,000 people sign up, 95% men. And it just drove me crazy because half of our company's women, I thought that at least half of the people would be female. And I realized how big the problem is that we do not, I mean, if you look at the floor here, we do not include the stronger sex. Satoshi's female, exactly. I'm promoting it here. I agree, I'm a big supporter too. So I think when you think about it, if we want to be inclusive and we want this revolution to take hold, we have to solve these problems. What is the killer app? Where are the female participants? How do we make it global? How do we make it inclusive? And how do we make the user interface and everything else so simple that you don't have to understand anything to use it every day? And what's your vision on how the ICOs are going to trend? More stability, obviously. It's just a little level out. I don't think it'll be a massive pop. I think it's going to be a small squeeze. So I think there's enough community involvement that self-governance will kick in my opinion. But what's your take on the ICO? We definitely, this is like a Cambrian explosion. So we are throwing money at everything, right? So we're throwing money at good projects, bad projects. It's like a spray-and-pray mentality, you know, of the old days, the 95 through 2000. We've seen that before. But from this, some great companies are going to be born and I think the winners here are going to be bigger than Google, bigger than Apple, because the market is bigger. Money is the biggest market in the world, right? There's nothing bigger than all the money in the world, right? By definition. So it's bigger than advertising. It's bigger than the social networks and it's bigger than Apple with whatever they're making, right? So I believe that out of these companies, there's several thousand companies here, right? It's 8,000 participants. There were 4,000 ICOs that already took place or that are coming to be. And out of that, you're going to have few giant winners. And obviously, Celsius is hoping to be one of them, but it's whoever builds the biggest community, he's the one that's going to win. And for us, it's all about giving back everything to the community, right? The mission's awesome. I love your mission and I love your expertise. Love your experience. I think the community really is great to have you in being a champion, being a mentor. I know you're doing a lot of paying it forward. Great, great job. What's your view for the young entrepreneur out there or someone who's got a growing opportunity that says, hey, you know what? I'm actually tailor-made for decentralization. I have a network community and network effect. I have all these great things going on. I want to scale. What's the playbook? That's a great question because a lot of people come to me and say, oh, I'm too late to the game. No one is too late to the game. The experts have a six-month experience, you know? Like, so you talk to most of the people here, this is their first event. This is their first show. So what I say to a lot of entrepreneurs is that if you pick the right vertical, you can very quickly become the best in the world at it. And I think that the blockchain, the first phase of evolution here on the blockchain is all about financial products and financial solutions. I wouldn't go after healthcare. I wouldn't go after insurance or solving financial problems that currently have giant toll collectors who collect all the value, right? Like the banks or like the financial service providers or insurance and so on. So if you can solve those areas, you can scale very quickly because the internet already has six to seven billion people on it. So now you can just bring them all in and huddle on their behalf in the crypto community. I feel like I should lie down on the couch and ask Dr. Alex for some more advice. So I'm actually going to ask you some- No couch here, man. There's no off switch here. I'll pass out. So much action going on. Great, I mean, the vibe here is amazing. So theCUBE, we're doing an open token model. Got a great community. We want to grow and be number one at digital media, covering events with a network effect, video and media. We see token as a great opportunity. What's your advice? If you're on our advisory team, what do you tell us to do? So the curation is excellent. I think you guys do a great job at kind of pooling the content and what's missing in this community is really a process, an automated process that kind of asks the community, what do you guys believe in, right? I mean, it's very hard for most people here to figure out which ones of these thousands of projects are trending right now, for example, right? And we can all vote on our app, for example. If you created an app that allowed all of us to vote during the show on what's trending and you had those guys being interviewed instead of me, you would have the killer apps. All of us know what they are in our app. You just have to vote on it. So use collective intelligence of the data and make our content operating system. Exactly, use your metadata that you're already producing to do real-time input and bring those guys here, interview them and ask them about why their projects are hot. Like Celsius, I mean, people ask me all the time, how do I get involved? How do I get involved? I saw you on Rubina, I saw you on this show. And so we managed to create a lot of buzz around us and there are a few other projects like that and the community needs to get around the good projects and support them because when we spend money, a lot of money on bad projects, we're not giving enough support to the good projects. You got to close loop that data, make it a community brand. That's what you're doing. That's what we're trying to do here, covering the events. So we're going to build a content operating system. Here we go. Runtime assembly, whatever the votes. Let everybody vote in real time, yes. Give me 50 hashtags and 50 times I see the hashtag. Right, and the size of the name grows based on the adoption. You would have to have clips instantly available. You have to have all the metadata. It's all real-time. You have to have all that stuff available. And the community will post it for you. You don't even, you just do this final interview. You just bring these guys and say, okay. You won number one, number two, number three, and you give them the awards. You know. I love this conversation, even though we're kind of riffing, having fun. But the point of it is you're- It's a new startup. Let's do an ICO. Let's do an ICO. We're going to jump to focus on that. Now, but this is really fundamental for the entrepreneurs. The tech culture, what we're talking about, basically DevOps, using cloud computing. We have unlimited- You can spin it up in a few days. You can apply automation, AI. That's your point. Trust the software. Yes. If you're doing it for the community, they will recognize it and adopt you very quickly. And they'll apply a human curation layer on top of it. With full transparency. You got to show that you're doing everything for the community. Like what we're trying to do, right? We're showing, when we tell you you're going to earn 5.1%, you can dig in and see who's getting paid and why they're getting this much money. What's the allocation? Every token that's being given to anyone, all the math behind it is fully transparent, right? Final question. Try to ask your bank for that. See what they say. Transparency? Go find another bank. Final question. Your summary of the show. What's your take? Was it good? Good vibes? What was the content agenda? What was the most exciting thing you saw? What's your summary of Consensus 2018? So Consensus, when they organized it, they were bragging that 4,000 people are going to show up. And that's why they moved to the Hilton from the Marriott. And then 8,000 people show up. The lines were outside the hotel room, right? The whole hotel. So it proves that the demand is there. Everybody wants to come and learn about it. They want to know why this is so hot. What, why this revolution is here to stay, right? And I think, so my, what I'm taking out of the show is that this is, this innovation is just in its infancy. And there's a lot of people who still yet to join. And the best idea is the winners have not yet been decided. So watch out for all those new ideas that we haven't heard about yet. And it's accelerated. Yes, it's definitely accelerating, yes. Alex Mishinsky, CEO of Celsius, former entrepreneur of multiple startups. He knows the old way. He sees the new way. Been a successful entrepreneur. Sees in the community member. Thanks for coming on. Thanks for having us. I appreciate it. I'm John Furrier here with the Cube on the ground, out in the open, doing it in the community. Cube coverage here of Blockchain 2018, Blockchain Week 2018, New York. Thanks for watching.